What are Incentive Wellness Programs?

Most employers, desperate to reduce health care costs in advance of the Cadillac Tax, are adopting a variety of health care tactics including wellness incentive programs. These programs use financial incentive rewards to motivate employees to monitor and improve their health, sometimes through health screenings and behavioral / lifestyle modification programs. Wellness incentive can be both positive (carrot) and negative (stick), centered on premiums paid by employees, or financial or other rewards offered for successful compliance and participation in wellness programsLast year, corporate employers spent $594 per employee on wellness-based incentives within their health care programs in 2014. That should increase significantly over the next few years.

Wellness incentive programs are popular among employers, but the research shows they rarely work as advertised. In fact, most controlled studies find that incentive wellness programs produce no savings in health care costs.One reasons for this exceptionally elusive ROI may be the difference in how well they work for healthier employees as opposed to those with chronic health conditions.

Healthier, motivated employees

Incentives targeting health screenings, free gym memberships, weight loss, etc tend to be attractive and even effective for healthier individuals. The incentive to get involved really does help them make the improvements they wanted to make all along. They just needed a little push.

Employees with chronic health conditions

Employees with chronic health conditions, in particular high blood pressure and heart disease are less inclined to participate or less likely to be successful. Trying to “force” them to participate using incentives or penalties is simply not an effective strategy. Moreover there has been a flurry of discrimination lawsuits regarding financial incentives or penalties for employees who resist participation or who aren’t as fit.So you have healthy people participating and not saving costs (albeit the program may be a good tool for recruitment and retention), and unhealthy people not participating or not succeeding and therefore not saving costs. Yet when ROI is reported, 87% of savings gained through wellness programs are produced by just 13% of the employees – those with chronic conditions like high blood pressure. The trick is how to get them engaged.

The Psychology Behind Why Incentive Wellness Programs Don’t Work

Incentive-based wellness programs seem like such a great idea, so why is it they don’t work? There are a number of reasons including:

Behavioral psychology - Extrinsic motivators (i.e. incentives) do not alter the attitudes and attention that underlie our behaviors. In the case of wellness behaviors, financial incentives will not create an enduring commitment to health behavior values or new habits. They simply temporarily change what we do. In fact studies show that offering incentives for losing weight, quitting smoking or using seat belts is not only less effective than other strategies but often proves worse than doing nothing at all (the overjustification effect ). You can’t pay people to start taking healthy care of themselves and you can’t penalize them when they don’t.

This is also one reason gamification of health behaviors can fail so miserably at sustaining long term behavior change. Unless the game is directly related reinforcing internal motivations, any behavior changes are temporary.

Avoiding blame - Less than 25% of employees at companies that offer a wellness program participate in it. Those that sign up are already the most motivated. Those with chronic health conditions like heart disease or obesity are less likely to participate. It’s not that these individuals don’t know they have a health problem. They hear the message all the time. Eat better, lose weight, walk 10,000 steps a day. Its your fault you have high blood pressure or diabetes and it is up to you to fix it. They participate less because they don’t want the same message rubbed in their faces yet again, by a wellness program doctor, health coach or dietician telling them it is their unhealthy lifestyle choices that puts them at risk.

Risk of failure - How many diets do women try before the age of 45? (answer 61). How many people have tried to lose weight, control their blood sugar, lower their blood pressure - and failed? The numbers are very high. To anyone with a chronic health condition, the repeated failures can be very discouraging. Wellness programs that focus on achieving target health goals, without modifying the underlying motivations and habits, are also discouraging (and likely to fail). People with chronic conditions who have tried and failed before to manage their condition, are not going to participate.

Cost Shifting From Employer to Employee

There is definitely good reason to be suspect about incentive wellness programs - why they don’t and can’t work. But some employers may be attached to these kinds of programs for a different reason: the programs may simply be a mechanism for shifting costs from the employer to the employee. A recent Marketplace report noted how the most vulnerable employees—those with the most health risks—bear greater costs (penalties of higher premiums and high deductibles) that can reduce their employer cost and in effect subsidize their healthier colleagues.The problem with this cost shifting approach, is that as premiums or deductibles go up for individuals with health risks or chronic diseases, they are less inclined to go to health provider when problems are small, manageable and low cost (e.g. hypertension). Instead they wait to get treated until they end up in the ER for a catastrophic event (heart attack, stroke, kidney failure). At this point the cost to the employer is also catastrophic. Even with Fortune 500 negotiated discounts, according to a report by the National Business Group on Health, an employee heart attack can costs employers up to several hundreds of thousands of dollars.So incentive programs that end up cost shifting may sound good this year, but not so good a year from now.

What’s the Alternative to Wellness Incentive Programs?

Of course, not all wellness programs focus on incentives. Many programs offer health assessments along with coaching, in-house clinicians, contests and prepared meals - all designed to help individual establish new heart healthy habits. The jury is still out as to the ROI of these programs, but some of the more sophisticated programs that offer personal health coaching predict a positive ROI in 2-4 years (just a little late for the 2018 Cadillac Tax hit). This still doesn't take into account low participation rates due to blame avoidance or risk of failure.An alternative approach is the one we are taking at Hello Heart.

Chronic disease self-management - Instead of starting with the premise that employees need to change their behaviors, we focus on getting individuals to care about themselves enough to track and understand their condition. This bypasses judgment, blame and risk of failure, while significantly increasing engagement and developing intrinsic motivators. In some employees, understanding will translate to increased self-care (e.g. diet, exercise, stress reduction, drug adherence). In others it will translate to awareness when their risk goes from mild to "see a doctor" so they can avoid (an expensive) cardiac event.

Focus on high blood pressure - We focus on high blood pressure (aka hypertension) and heart disease. Heart disease is the #1 cause of death in the U.S., over 8 times that of diabetes. Employees with high blood pressure cost employers $760 more than others. If high blood pressure deteriorates to heart disease, cost can increase to $10,000 more per employee per year. By focusing on the highest cost factor to employer health care, we specifically target people with chronic health conditions and help employers maximize cost savings.

ROI in under 1 year - With no expensive coaches and higher participation by patients with chronic health conditions, ROI is achieved in months, not years.